South African investors seek to construct two gas pipelines for the transportation of Mozambican gas to the country, Interfax Energy reported.
South African SacOil has signed a cooperation agreement with Chinese and Mozambican investors to construct an estimated 2,600km large-diameter pipeline to transport natural gas from northern Mozambique’s Rovuma Basin to the South African Gauteng Province. The African Renaissance Pipeline (ARP) project is expected to cost $6b. The trilateral consortium with the China Petroleum Pipeline Bureau has made the most recent progress and is set for the construction, according to Energy Global. The signing of the deal is seen as a major milestone and is in line with SacOil’s strategy to become a leading pan African oil and gas company engaged in upstream, midstream and downstream activities, All Africa wrote.
In a second rival pipeline project, Gasnosu, South African state power utility Eskom seeks to construct the pipeline from northern Mozambique to run through the load center around Maputo into South Africa, informed Interfax Energy. Eskom is looking to construct around 5 GW of gas-fired power plants along the pipeline, with half the capacity in Mozambique and half in South Africa. Gasnosu was first proposed three years ago by Gigajoule – a South African company that operates gas-fired power plants and the gas transmission network around Maputo and Matola in southern Mozambique – in partnership with Mozambique’s state oil company ENH.
As the two pipeline projects are vying to export gas to South Africa, there are concerns that this may leave the country overly dependent on Mozambican gas, industry experts have warned. However, there is growing political momentum behind the deals, as it would also ensure industrialization throughout Mozambique and provide the country with at least 2.5 GW of power to be shipped to its southern neighbor.